FTAI Infrastructure Inc. on Aug. 6 reported agreeing to purchase The Wheeling Corporation, owner of two-time Railway Age Regional of the Year recipient Wheeling & Lake Erie Railway Company (W&LE), for cash consideration of $1.05 billion from an entity controlled by Larry R. Parsons, CEO of The Wheeling Corporation.
Operating more than 800 miles of track in Ohio, Pennsylvania, and West Virginia, W&LE is one of the largest Class IIs in the country and the largest Ohio-based railroad. It interchanges with CN, CSX, and Norfolk Southern, as well as 14 small roads, including Transtar LLC’s Union Railroad Company, outside of Pittsburgh, Pa.
FTAI Infrastructure Inc. (NASDAQ: FIP) is externally managed by an affiliate of diversified global investment firm Fortress Investment Group LLC, and includes in its portfolio: Transtar, which owns and operates six Class IIIs and a contract switching company transporting raw materials, semi-finished products, and finished products for a wide range of industries; Jefferson Energy Companies in Texas; Repauno Port & Rail Terminal in Pennsylvania; and Long Ridge Energy & Power in Ohio. Concurrently with the acquisition’s closing, FTAI Infrastructure Inc. said it plans to refinance its existing 10.50% senior notes and Series A preferred stock. According to the company, it has received commitments for $2.25 billion of total capital including $1.25 billion of new debt to be issued by FTAI Infrastructure Inc. and $1 billion of preferred stock to be purchased by Ares Management funds and issued by a newly formed holding company that will own the combined Transtar and W&LE business. FTAI Infrastructure Inc. management plans to discuss additional details regarding the transaction and related financing during a scheduled second-quarter earnings call on Aug. 8.
“For over 30 years, Larry Parsons has been the driving force behind the rebirth of the W&LE,” FTAI Infrastructure Inc. said. “Taking the helm in 1992, Mr. Parsons guided the railroad through a period of extraordinary change—transforming a coal-dependent line into a modern, customer-focused regional railroad. His leadership has left an indelible mark on the company and the communities it serves. In seeking a long-term partner to carry this legacy forward, Mr. Parsons chose FTAI Infrastructure Inc. and Transtar, whose values and operational excellence reflect the foundation he spent a lifetime building.”
“Growing our freight rail platform has been a key focus for FIP [FTAI Infrastructure Inc.], and we are thrilled to have this opportunity to combine with the W&LE,” FTAI Infrastructure Inc. CEO Ken Nicholson said. “We believe the W&LE is an excellent candidate for a combination with Transtar, adding scale, diversification and network reach. Together, Transtar and the W&LE have identified several growth opportunities and operating efficiencies that we expect to drive substantial growth in revenue and EBITDA. As a result of these opportunities, we expect our combined freight rail segment to generate approximately $200 million of annual Adjusted EBITDA by the end of 2026.”
According to FTAI Infrastructure Inc., the transaction is expected to close into a voting trust (pursuant to rules established by the Surface Transportation Board) in third-quarter 2025; it is subject to customary closing conditions. The company reported that it expects to gain control of W&LE upon receipt of approval by the STB, at which time the W&LE will be an affiliate of Transtar.
Barclays and Deutsche Bank provided debt commitments and served as financial advisors to FTAI Infrastructure Inc.; Sidley Austin LLP and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors to FTAI Infrastructure Inc.; and Calfee, Halter & Griswold LLP and Fletcher & Sippel LLC acted as legal advisors to W&LE.
